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Huge DOE draw but Oil fails to rally

Summary:

  • DOE inventories: -12.6M vs -4.1M exp
  • Last night’s API: -6.8M
  • Oil spikes higher in volatile trade

The latest crude oil inventory numbers from the DOE have shown a mammoth drop, falling by 12.6M on the previous reading. Compared to an expected print of -4.1M the drop is far larger and also comfortably below the 6.8M seen in last night’s private equivalent, the API release. The drop marks the 4th substantial decline in the last 5 weeks, with the drop today the largest of the lot.  

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 The drop in the DOE was the largest of the year by a distance and marks another sizable drop in recent weeks. Source: xStation

Looking at the report in more depth, the other components were fairly mixed which could account for the fairly mixed market reaction. The higher distillates figure and the lower refinery utilisation could both be seen as negative for price. In no particular order are the some interesting components, presented in the form of actual vs expected:

  • Distillates: +4.1M vs +1.0M 
  • Cushing: -2.1M vs -2.1M 
  • Gasoline: -0.7M vs -1.0M 
  • Refinery utilisation: -0.40% vs 0.1%

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 The price of Oil spiked sharply higher in the immediate reaction, although this move was short-lived with price erasing all the gains to trade little changed 30 minutes later. Source: xStation

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  The longer term outlook for the market remains unclear, although a failure to rally on a massive draw could be seen to hint at some underlying weakness. A fall below prior support around 76.50 could lead to a sustained push lower. Source: xStation 

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